Saturday, December 6, 2008

Two Approaches to Growth

Recent comments by former Oklahoma Governor Frank Keating and the transition of leadership in the Oklahoma Senate have once again brought focus to an important change that needs to occur sooner rather than later.

In a radio interview conducted last month, Keating stated he'd like to see the new Legislature repeal the state income tax. Keating explained that while he was governor, he heard constantly from business people and others that the repeal of the income tax would stimulate business growth in Oklahoma.

In 2004 and 2005 during an economic upturn, legislative changes in the House of Representatives made it possible for some tax reforms to occur and as a result, the first steps were taken towards eliminating this punitive tax.

Other states also appear to be enacting tax reforms, as a recently released report from the Tax Foundation shows that Oklahoma's tax burden has moved up to being the 19th highest in the nation.

I believe there will be two distinctly different trains of thoughts to emerge in the Legislature on the subject of tax reform.

The first approach is represented by those who know that Oklahoma must eliminate taxes in order to be competitive for new business. This is fair for all parties involved because the tax code would keep taxes low for everyone, thereby keeping the incentive for growth.

The other viewpoint is represented by those who believe that in order for Oklahoma to grow, it must keep taxes at current levels and create a number of incentives and tax loopholes to compete in an ever-growing war between the states over who can offer the best giveaways to prospective new employers.

The second approach is rife with potential for corruption and abuse. The people who have the power to hire lobbyists and finance politicians' campaigns will use this system to make sure they receive incentives at the taxpayers' expense, while small businessmen and average people will not be able to afford to make this same "investment." Worse yet, this approach will be subject to the same abuse that has been exposed in the past, when several Oklahoma's legislators were prosecuted for using similar programs to funnel money for personal benefit.

This approach also keeps an elite class of legislators, bureaucrative central planners and their friends in a very powerful position since they have the power to determine who succeeds and who fails, instead of success being dependant upon the hard work of individuals. If taxes are simply reduced across the board, the power of the elite is much more limited.

During the next two years, I am committed to working hard to expose the inefficiencies in state government so that spending cuts and comprehensive tax reform can occur sooner rather than later.

No comments: